Read Case 10.1 and answer the following questions.

A self-managed team is an attractive concept.

First, define the concept. Second, is it understood the same at Zappos?

Case Case 10.1 Zappos Eliminates Managers Online shoe retailer Zappos (an Amazon company) is In 2013, Zappos HR department was the first group known for its exceptional customer service, a strong to implement the new holacratic approach. But Hsieh culture based on 10 core values, and encouraging the thought the implementation process was too slow, and individuality of employees. Tony Hsieh, Zappos CEO the company was left operating with both the old man- and co-founder, has become well known for his mantra agement structure for some departments and new work of delivering WOW! to the company's many satis- teams in other parts of the organization. So Hsieh fied customers and recognizing employees as a key decided to rip the band-aid off" and accelerate the component of the firm's overall success. implementation of holacracy throughout the entire Typically earning a spot on Fortune's annual 100 organization. Effective April 30, 2015, in an effort to Best Companies to Work For list, Zappos has recently eliminate the company's management hierarchy, there been in the news for other reasons. Several years ago, would be no more people managers, and certain de- Hsieh decided to implement a new business strategy partments within the organization (e.g., merchandising, called holacracy, in which management jobs and titles finance, technology, and marketing) would be phased are eliminated, and self-managed teams are the core of out and those jobs would transfer to roles in the appro- a flat organizational structure. priate work circles. Created by software engineer Brian Robertson, hol- As part of the process, Hsieh sent a lengthy e-mail acracy replaces a typical vertical hierarchy with a to employees, explaining why he believed holacracy series of self-managed work circles that operate with a was important and how it would help spark innovation. certain amount of overlap when it comes to employees' Recognizing that not everyone would thrive in a team roles. Each circle is led by people called lead links, atmosphere, Hsieh offered employees the opportunity responsible for making sure the team gets its work to leave the company with a minimum of three months done; however, these leads have little or no formal of severance pay and paid health care benefits for a authority and cannot force employees to do anything specific period of time. For some Zappos veterans, the they don't want to do. offer was even more generous: one month of pay for the team experiment will lead to success. In addition to losing nearly one-third of its employees, for the first time in eight years, Zappos did not earn a spot on Fortune's 100 Top Companies list in 2016, where employees' positive evaluations of their company count heavily in the final rankings. 1. PP me more in 2. - Hsieh how we all resu - stay Who with WCIC snoopportu. advanicum every year worked at the company. To date, more than 30 percent of the company's 1,600 employees have either taken the offer to leave or left on their own to seek employment elsewhere. Hsieh hopes holacracy will help employees operate more like entrepreneurs and less like cogs in a bureau- cratic structure. He also thinks this new team approach could help create unlikely collaborations that could lead to more innovation and creativity in the organization. The changeover has not been without obstacles. In addition to losing experienced employees (including former managers), the new approach continues to cause confusion among employees who were use to seeking advice and direction from their supervisorswho are now gone or who are now co-workers in the flat orga- nizational structure. Also, in the coming year, former managers who have new roles at the company will, in all likelihood, experience pay cuts because their re- sponsibilities as managers have been eliminated in the new team approach. Some critics say there is little or no motivation for people to stay at Zappos if there is no opportunity for advancement up the corporate ladder. Although he regrets not implementing holacracy sooner, Hsieh says it's too early to tell whether the self- managed teams approach will be a success. (Holacracy's creator says it takes between 5 and 10 years before a company will know whether the new team approach will be successful.) Hsieh firmly believes that the company's core values and strong culture provide a solid foundation for such an exciting and bold move to self-managed teams. However, Zappos' employees don't seem convinced that 3. the offer to leave the company? Sources: Organization website, How Holacracy Works," http://www. holacracy.org, accessed April 21, 2016; Jennifer Reingold, How a Radical Shift Left Zappos Reeling," Fortune, http://fortune.com, accessed April 21, 2016; Zappos Tries Holacracy, 200+ Quit, CNBC, http://video.cnbc.com, accessed April 21, 2016; Adam Lashinsky, Why Amazon Tolerates Zappos' Extreme Management Experiment," Fortune, March 4, 2016, http://fortune.com; Ann Latham, Why Pain Is Inevitable for Zappos and Holacracy, Forbes, January 27, 2016, http://www.forbes.com; Gregory Ferenstein, The Zappos Exodus Wasn't about Holacracy, Says Tony Hsieh, Fast Company, January 19, 2016, http://www.fastcompany.com; Rebecca Greenfield, Holawhat? Meet the Alt-Management System Invented by a Programmer and Used by Zappos." Fast Company, March 30, 2015, http://www.fastcompany.com; Rebecca Greenfield, Zappos CEO Tony Hsieh: Adopt Holacracy or Leave," Fast Company, March 30, 2015, http://www.fastcompany.com; Aimee Groth, "Holacracy at Zappos: It's Either the Future of Management or a Social Experiment Gone Awry, Quartz, January 14, 2015, http://qz.com